Contracts for Difference - Frequently Asked Questions (Faqs) ISSSUE 1: 6Th October 2014

Contracts for Difference - Frequently Asked Questions (FAQs) ISSSUE 1: 6th October 2014 Dated: 04/09/2014

These FAQs address queries raised by stakeholders to date. These FAQs are for information only and do not supersede or replace the requirements contained in The Contracts for Difference (Allocation) Regulations 2014, The Contracts for Difference (Definitions of Eligible Generator) Regulations 2014 and Final Allocation Framework for the October 2014 Allocation Round. The above mentioned documents take precedence in the event of any conflict or inconsistency between any of them and these FAQs.

These FAQs do not constitute legal or investment advice and applicants are urged to obtain their own independent advice. It is our intention to keep these FAQs under review and to publish revised issues from time-to-time.

CONNECTION AGREEMENTS

Question 1

What are the different types of connection in the CfD Framework?

Answer

There are three types of connections, which are:

Direct Connection – connection to the transmission or a distribution system with all power to be exported to that system.

Partial Connection - connection to the transmission or a distribution system via an Operator of a Private Wire Network with only part of generated power to be exported to the transmission or distribution system.

Islanded CfD Unit– where the CfD Unit is connected to a Private Wire Network which is not connected to the transmission or distribution system. Under this definition the generator could be the owner or the Private Wire Network or it could be owned by another party.

Question 2

If I have a Direct Connection, which connection agreements do I need to provide?

Answer

You must provide each Connection Agreement (original and latest) with the Transmission System Operator and/or Distribution Network Operator(Allocation Regulations 25(2) and 25(6)).

In accordance with Allocation Framework 4.1(i), the Connection Agreement must provide for at least 75% of thecapacity (including any non firm capacity) specified in the Connection Agreement. If you are Offshore and applying as Phased Offshore Wind CfD Units, the 75% test is applied to total capacity across all the phases and not to each individual phase.

Question 3

If I have a Partial Connection, which connection agreements do I need to provide?

Answer

If you are the owner of the Private Network, you must provide each Connection Agreement (original and latest) with the Transmission System Operator and/or Distribution Network Operator(Allocation Regulations 25(2) and 25(6) and Allocation Framework 4.1(iii)(a)).

If you not the owner of the Private Network, you must provide:

• each Connection Agreement (original and latest) between the Operator of the Private Wire Network and Transmission System Operator and/or Distribution Network Operator; and
• each Private Network Use Agreement (Allocation Framework 4.1(iii)(b)) between the Operator of the Private Wire Network and the Private Network Generator.

Question 4

If I am an Islanded CfD Unit, what evidence do I need to provide?

Answer

All Islanded CfD Units will be required under Allocation Regulations 25(3)(a)to confirm:

• that there is no connection agreement with either the Transmission System Operator and/or Distribution Network Operator: and
• that no such agreement will be sought.

If you are not the operator of the Private Wire Network, you must additionally provide each of your Private Network Use Agreement(s) (Allocation Framework 4.1(iii)(b)) with the Operator of the Private Wire Network.

Question 5

Do I need to provide evidence of any Statement of Works process?

Answer

No. The Statement of Works process is between the Distribution Network Operator and the Transmission System Operator and is not a connection agreement as defined in Allocation Regulation 25(6).

Whilst the qualification criteria for the CfD does not require evidence of Statement of Works process, applicants should be mindful of the impacts that this process could have on their final connection date and how this may affect their requested Target Commissioning Date.

Question 6

I have an agreement in place with an Independent Connections Provider (“ICP”) for the works to get from the CfD Unit to the transmission or distribution network – do I need to provide this?

Answer

No - The agreement you have with the ICP is not a connection agreement as defined in Allocation Regulation 25(6).

Question 7

Distribution Network Operators invariably do not tend to countersign their connection agreement with the Generator. What can I provide as evidence instead?

Answer

Under Allocation Regulation 25(6), a Connection Agreement is defined as an agreement to connect.

Allocation Framework Rule 4, also states that countersigned offer(s) are included within the scope of the definition of a Connection Agreement.

We understand that offers between the Distribution Network Operator and the Generator may not always be countersigned. In these cases, acceptable evidence of a countersigned offer would be the connection offer letter signed by the Distribution Network Operator and the Generator’s signed offer acceptance. Where the Distribution Network Operator has not signed the connection offer letter, it would be acceptable for you provide an email copy of the connection offer letter alongside your signed offer acceptance.

Question 8

Do I need to provide all copies of Connection Agreements/Countersigned Offers?

Answer

You need to provide full copies of the original connection agreement/countersigned offerand the latest connection agreement(s)/countersigned offer(s) that apply to the relevant CfD Unit which demonstrate the evidence that we are reviewing as part of our checks set out in Allocation Framework Schedule 4.

Question 9

I am an Offshore Direct Connection with 3 phases - can I set my Target Commissioning Date for any of the phases earlier than that that specified in the connection agreement?

Answer

Thereis no requirement for the phases you have on the CfD to be consistent with the connection agreement as long as they areno more than 3 and the Target Commissioning Date for Phase 1 cannot be earlier than the earliest connection date set out in the connection agreement.

Question 10

Will I need to provide confirmation of proof of payments under the Connection Agreement as part of the CfD Application?

Answer

No proof of payment is required as part of the CfD Application.

APPLICABLE PLANNING CONSENTS

Question 11

What are the applicable planning consents in the CfD Framework?

Answer

There are 5 applicable planning consents, which are:

• a Development Order;
• a Transport and Works Act Order;
• a Planning Permission under the Town and Country Planning Act;
• a Section 36; and
• a Marine Licence (Allocation Regulation 24).

Question 12

What evidence of applicable planning consents do I need to provide?

Answer

You will need to confirm for each of the 5 applicable planning consents as to whether or not it applies to your project.

If it does, you will need to provide full copies of the applicable planning consents which apply to the relevant works, which enable your CfD Unit to be established or altered and to allow you to get power to the transmission or distribution system (Allocation Regulation 23(2)).

Where the applicable planning consents does not apply to your project, you will need to confirm the reason why but do not need to provide documentary evidence to demonstrate this (Allocation Regulation 23(6)).

Question 13

What exclusions apply to the provision of applicable planning consents?

Answer

You will not be required to provide evidence of applicable planning consents in the event that you (or a contractor appointed by yourselves) are not undertaking the works and the responsibility for such works is set out in a Connection Agreement with a Distribution Network Operator or the Transmission System Operator (Allocation Regulation 23).

As an agreement with an ICP is not a connection agreement, you will need to provide evidence of consents for these works providing they are one of the applicable planning consents defined in Allocation Regulation 24.

Question 14

Where the applicable planning consentcontradicts what I have provided as part of my CfD Application, do I have the opportunity to explain such discrepancies?

Answer

The CfD Application will provide the opportunity for you to explain any discrepancies e.g. why the MW are not identified in the applicable planning consent.

INCORPORATION

Question 15

What evidence of Incorporation do I need to provide?

Answer

If you are an incorporated body (which includes SPVs) in the United Kingdom or outside the United Kingdom, you must provide your company registration number and an electronic PDF copy of your certificate of Incorporation (or equivalent if non UK Company).

Your certificate of Incorporation must be provided in English.

Question 16

Do I have to be registered for tax in my host country (e.g. VAT registered in the United Kingdom) to apply for a CfD?

Answer

It is not a requirement of under the Allocation Regulations Schedule 1(2) for you to be registered for tax in your host country.

Question 17

What evidence of registration for tax do I need to provide?

Answer

Where you are VAT Registered, you must provide your VAT Registration Number and an electronic PDF copy of yourVAT Certificate of Registration. (Allocation Regulations Schedule 1(2).

If not located in the United Kingdom, and where you are registered for tax, you must provide your tax registration number and an electronic PDF copy of yourTax Certificate.

Question 18

Can a group VAT registration (i.e. VAT registration for two or more companies or corporate bodies as one entity with one VAT Registration Number) be used instead of individual VAT registration?

Answer

Yes, group VAT is registration is acceptable as long as the Applicant is specifically listed on the VAT Certificate of Registration.

MISCELLANEOUS

Question 19

Will Applicants need to submit bank account details as part of the CfD Application?

Answer

There is no requirement for Applicants to provide bank details as part of the CfD Application.

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